Vermont Legislature SmartTranscripts:

[Speaker 0]: Good morning. It's Wednesday, April 8. Nice sunshine out there. It's supposed to shine all day long, but it isn't my job to be the weatherman, but it sure seems nice to have it out there. We're gonna spend some time this morning talking about professional logging contractors and logging issues. We have Dana Doran, Executive Director of Professional Volume Contractors of the Northeast. Good morning, sir. The floor is yours.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Good morning, senator Ingalls, members of the senate ag committee. So good to see you. Did you want me to talk about s 60 as well today? No. Just You

[Unidentified Senator (member, Senate Agriculture Committee)]: talk about whatever you like to talk about. Actually, the

[Speaker 0]: floor is yours.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: We've been supportive of that since last year, so I appreciate all the work that this committee has done to move that forward. So I'll set that one aside. Apologize I wasn't able to be there in person today. I'm glad that I had the opportunity to introduce myself to many of you last week in the committee. So again, I'm Dana Doran, Executive Director of Professional Logging Contractors at the Northeast. We are an educational nonprofit that represents timber harvesting and timber hauling contractors in the state of Vermont. We started that work back in 2023. Last week, was able to give you a copy of our economic impact report that details the economic impact of logging and trucking in the state of Vermont. It's again in my written testimony that I sent over to the committee this morning. So I won't belabor all of those points again today, but just briefly mention that as of 2024 logging and trucking in the state of Vermont effectively produced 140,000,000 of annual economic output was responsible for about 1,300 jobs, both directly and indirectly. So I've been talking to Senator Ingalls and members of the committee for a few months now about what's been happening in the industry. And we have a request regarding the sales tax exemption or extending the sales tax exemption on forestry equipment over to trucks and trailers. And that's what I'm gonna present to you today. But let me give you some background as to why we are requesting this and requesting the help of this committee, especially in last month and a half of the legislative session at this point. So timber harvesting and hauling contractors in Vermont are at a crossroads. While this past winter was normal from a weather perspective, two of the last three years have not been normal with very warm, wet, and variable weather patterns. Additionally, markets inflation are not normal as evidenced by mill closures, significant market curtailment, and extreme increases in the price of diesel. In 2024 and 2025, Vermont experienced the closure of four important markets as a result of what's occurred throughout the market, throughout the industry, decline in demand for wood products, inflation for interest rates has really curtailed a lot of both development but also consumption. So in the last two years alone, Vermont has lost Putney Paper in Putney, A Johnson in Bristol, Mill River in Clarendon, and most recently the Ames True Temper mill down in Wallingford. These closures are additive to the low grade market struggles in the Northeast over the last decade, but I'm gonna detail what's occurred in the last six months. So low grade markets as we talk about them, and low grade is really, it's pulpwood. It's the kind of the secondary product that grows in the forest that needs to be thinned and weeded in order to allow the high value products to take off. Think of forestry as basically gardening. If you plant a row of carrots, you need to thin that row of carrots in order to produce a strong yield of carrots. You've got to get rid of the competitors so that sunlight and water can impact those who are effectively trying to withstand and grow. So the pulp and paper markets are vital and critical to be able to do proper forestry and civic culture, and that is to take out low grade, so again, allow the high grade to take off. And to do that, you need markets. You need pulp and paper markets, you need biomass. So pulp and paper markets in the Northeast, which are the primary purchaser of that low grade wood, have teetered on the edge since last fall, October and November. At one point in November 2025, all five of the consuming mills in Maine, New York, and Quebec stopped buying wood at the exact same time. That has to do with many different factors, tariffs, lack of market, the ability to sell markets both domestically and internationally, and that's never happened in probably the last one hundred and twenty five years since pulp and paper markets really started to take off in the Northeast. As a result, they decided to curtail operations rather than losing money, and that created havoc throughout the industry. Adding insult to injury, inflation on equipment, parts, wages, labor, and now fuel have been upwards of 40% over the last four years. Tariffs in just the last year alone have added 20% to all logging equipment and parts since January 2025, and we all know what has occurred with diesel over the last thirty days. So contractors, similar to farmers, have nowhere to turn to offset these cost increases as they are price takers, they are not price sitters. They are and therefore, they're questioning their economic viability of their businesses and their path forward. As a result of this turmoil and no solid forecast for normalcy, our organization and our membership in Vermont have developed several policy initiatives over the last year and a help, year and a half to help with this. So S46, which was introduced in 2025 and would have exempted log trucks and trailers from both the purchase and use tax as well as the sale of and use tax for repair parts was a priority for our membership. S six s 46 was deliberated by the Senate Transportation Committee last year and was ultimately amended to only provide an exemption on the purchase and use tax as it was the only source of revenue that the transportation committee had discretion over. S 46 passed the senate last year and moved over to the house, but it's been left on the wall in house transportation since April 2025. Primarily, and we understand why the deficit situation with the highway fund. We would like to have the Senate Ag Committee consider effectively taking part of that original bill, which is the sales tax exemption and potentially putting it into miscellaneous bill that's before your committee this spring. That will have a and I'll get into the details of what the potential fiscal impact looks looks like, but that would only, of course, have an impact upon the education fund, which we we obviously understand the impact there as well. So for context on why the legislation is so vital, I already mentioned what's occurring in markets and what the industry is up against. Adding some further information to that, back in 2014, Congress mandated the use of what's called tier four heavy duty engines that are used in both agriculture, but also over the road trucking. These engines have reduced emissions by 98%, which is vitally important to environmental protection. However, that has come with a very heavy cost for heavy duty trucks that have effectively doubled over the last ten years. Logging and trucking contractors operate in a highly competitive and capital intensive market. Profit margins are razor thin and close to non existent, this has had another huge impact. Exempting trucks from sales and use taxes will help contractors maintain lower operating costs, improve profitability, and remain competitive regionally. Additionally, over time, repairs and maintenance actually are one of the largest expenses for these vehicles and exempting repair parts from the sales and use tax as was proposed in the original version of the S46 will provide immediate relief to eligible companies. These exemptions will ultimately support local economies by protecting rural jobs and are the home base for these companies. So the general assembly exempted logging equipment from these taxes in 2017 and 2018, but did not extend either the purchase and use tax exemption or the sales and use tax exemption to motor vehicles or trailers associated with forest operations. Transportation vehicles in the logging industry are not just for getting from point A to point B, but are an essential tool in the production and transport of raw materials, I. E. Timber to mills. Since trucks are integral to the supply chain, similar to machinery used in manufacturing or farming, they can be classified or should be classified as production equipment, which is often tax exempt in other industries. Vermont is surrounded by states that currently exempt these vehicles from taxation, and I provided you a table in my testimony that shows you what what kind of Vermont is surrounded by. So New Hampshire is a 100% exempt from sales taxes on trucks and trailers. The state of New York has exempted trucks and trailers from sales tax in both forestry and agriculture since 1999. And right now in the supplemental budget in Maine, there is now language that will exempt all log trucks, trailers, pickups, service trucks, low beds from the sales tax in Maine effective 01/01/2027. The Maine legislature will conclude their session next Wednesday, And we're very confident now that the appropriations committee has voted it into the supplemental budget that it will pass and Maine will take the lead of New York and New Hampshire, leaving Vermont effectively the only one of the four on the Northern border regional area to still tax log trucks and trailers on repair parts, as well as their initial purchase. So lastly, when the original sales and use tax and purchase and use tax was passed in 2738, it's our recollection that JFO calculated the revenue impact of those exemptions to be under $100,000 annually just for logging equipment. We would expect that JFO's estimate for only the sales and use tax exemption or repair parts for trucks and trailers should be a similar amount. Vermont is losing logging and trucking capacity. This is negatively impacting rural communities and more importantly, the businesses that steward our forests in a time when forest health and integrity is well known to be a critical part of both climate resilience, but also the rural economy. Those that remain committed to the industry need every dollar they can hold on to for reinvestment in their equipment, their employees, best practices for survival. So in conclusion, we would greatly appreciate this committee considering the sales and use tax exemption only for repair parts that are used in the industry at this point in time. So happy to answer any questions and appreciate the opportunity to testify today.

[Unidentified Senator (member, Senate Agriculture Committee)]: First of all, thank you for the testimony that you've been hit really hard, from a couple of different, areas. What contingency plans have the loggers been made to to exist for god's sake? Yeah. It it it's just I just from your testimony, it's been extremely tough and getting tough.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Yep. Appreciate the question, senator. You know, the contingency basically, there's two contingency plans. One, stop operating, or two, reduce your operation and and and diversify. Sam Lincoln, who many of you know, Lincoln Farm Timber Harvesting and Randolph Center, Sam has has put his logging equipment up for sale. And Sam and his sons have decided for the for the short term, they're gonna move into earthwork and excavation because they feel like that for them is more profitable. So you're gonna see a company that has been heavily invested in logging in for twenty five years, I think is gonna close their doors and move only into excavation. Those are concrete examples of what the contingency plans are, senator. There is no way as a logging contractor in Vermont, you could pass these costs along. The mills are not providing fuel bonuses even for the high diesel prices right now. And there is no way to pass those costs along other than to reduce what you pay landowners for stumpage. And in a competitive environment, your landowners are gonna say, well, I'm just not gonna harvest my wood. So that effectively becomes this down downward spiral for contractors for a contingency plan.

[Unidentified Senator (member, Senate Agriculture Committee)]: What would be the what would happen if you had a significant number of loggers in essence do that? I mean, what would be the byproduct of that?

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Long term, the byproduct is lack of forest management, impacts upon the forest from a sivicultural standpoint, impacts of what could be fire blight, invasive species. Landowners may the value proposition for landowners becomes where can I find a return on my investment? If I can't harvest wood to pay my property taxes in order to hold on to my property, I'm gonna look at selling it. And that, as we all know, there's a huge debate right now in your body about, not your committee, but in the body specifically about Act 81, Act two fifty, development, etcetera. And if you can't hold onto forest land, if you can't afford it because you can't get a return on your investment, the highest and best use is to develop it or sell it off. And I think that in the long run is where those impacts really become real.

[Speaker 0]: Because we have a little bit of oh, go ahead.

[Unidentified Senator (excavation business background)]: Update, I I'm an up excavator as well. And, when I hear, you know, Hey, can we get a tax exemption? It kinda is like, Oh God, I'd love one as well. Listening to what the foresters go to- through compared to an excavator, usually you can carry that cost onto your, customer. And when we vlogged, I've noticed that linear foot price will go up when they come to haul it away. My question would be, you know, you get this exemption, you get that. Do you believe they'll keep the savings to make more money or will they pass some of that back to the landowner that, hey, we're not gonna raise our price. Of course fuel is always, changes regularly.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Right.

[Unidentified Senator (excavation business background)]: That's my concern. It's like, and I understand other states do it, which is great. Vermont's only 640,000 people, makes it a lot harder. You know, our farmers all around here, they get subsidies from Maine gives their farmers, Mass does, New York does. Why doesn't Vermont? We can't afford to give subsidies. Sure as we love this committee, we'd support it all the way if we could. So, I hear your plight. I'll probably be in favor of it, but it- it- it's- it's something as businessmen that we all deal with. And yes, like you said, the long term effects. The upside is that as you do get scarcity, then the price may come up. Maybe then there is a bigger demand at the mill because not as many people are doing it. That's what you hope for as well. So it's very hard for me to get a good, you know, I hear the plight, wanna help, but at the same time, it's like, I'm in the business and I'd like to help.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Sure. I certainly understand where you're coming from, Senator, and I think you hit the nail on the head. With earthwork contractors and excavation, you have the opportunity to pass that cost along as a project cost. It's an expense. As I mentioned with logging, loggers are price takers. They cannot set their price other than in stumpage. And at some point, as I mentioned, there is the point of no return where you're competing with other contractors and landowners have to make a determination, are they going to be able to monetize what they have? And they have to make a decision as well. And we all know what happens when markets there's a downturn in markets. A lot of landowners rethink whether or not they're going to harvest wood or not. That puts pressure on the contractor. Directly to your question, what are the contractors going to do with just the savings on sales taxes on repair parts? It's reinvesting in their business. What they need to do is to maintain stumpage levels at a at a place where landowners are going to continue to harvest wood. Representative Lipsky, I see just came into the room. Logging contractor, he can tell you, you know, what repair parts cost for his trucks and trailers and then what the sales tax would would mean and what he would do with it. I I don't think any logging contractor is gonna sit there and say, hey, I'm wealthy now. I got a sales tax exemption on repair parts, and I'm gonna I'm gonna reduce what I'm paying in stumpage. I think it it gives them an a lifeline to continue in operations and continue to pay competitive stumpage back to the landowners.

[Speaker 0]: I guess we have a little bit of time here. Give us a little bit of 101 on to what the industry is doing and what's causing the pain. Mainly as far as who's doing the backfilling, why did five mills decide to close, when we already know that there is a demand for the product? So give a little information on that.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Sure. I'll start with the sawmill side of the world, which are where those five mills that I mentioned closed, or if I should say four in the state of Vermont, mentioned the hardwood mills on the sawlog side. That is directly attributable to a couple of things. One, we've had increased interest rates for borrowing and homeowners after the pandemic for the last effectively three years have really slowed down in terms of construction, building construction, and renovation. When the cost of capital went from the prime rate was zero and the prime rate is now 4.3, commercial rates as well as mortgage rates are hovering between 6.57.5%. So that has effectively curbed both development, but also investment in in construction. That's had an impact upon those four mills in the state of Vermont, which have closed their doors. You also have Canadian competition for pine and hardwood, and the Canadians are heavily subsidized. So as The United States has really struggled to support manufacturing, the Canadians have continued because they've got lots of different subsidies that their sawmills have that we don't. And so it's put US mills, Vermont mills, at a real distinct disadvantage. That's on the log side. On the pulp side, globally, we saw a retraction in pulp and paper starting in, let's say, the 2023 when inflation went through the roof. It became very expensive to ship globally, and so there was a lot of retraction. The tariff situation last year in 2025 and into 2026 is really what I would say created a situation going into winter that we've never experienced before. You saw Finch in New York. You saw International Paper in Ticonderoga. You saw Domtar in Quebec, ND Paper in Maine, SAPI in Maine, and Woodland Paper in Maine, all effectively stopped buying wood at the same time. And that was as a direct result of tariffs. They had to make a conscientious decision. Could they sell their product internationally and absorb the cost of the tariffs? And they basically put things on hold. That created chaos and havoc in the low grade markets. And all five are still bought wood over the winter, but not at the same level that they did. And it's just been this constant faucet is on, faucet is off, and logging contractors can't build a business around that. And so those, if you look at the markets where loggers sell wood, that's what's going on from both a building construction, but also from a low grade perspective.

[Speaker 0]: We made a good point about what happens when we don't log, as far as talking about the broad picture of it, including other talking points that go on with what healthy forest do. One is a healthier forest sequesters more carbon and if that is the argument that's to be made, is that that's what we need to do, then we need to make sure that our forage are healthy. Where are we right now at the rate of logging and forest being overgrown versus to what they could be as far as managed correctly. What's the growth rate versus logging rate as far as what's going on? And for a contrast of anybody that might be wondering, that's listening online where I'm going with this, at one time, not too long ago, Vermont was 80% cleared, and now it's 80% forested. Where are we going with that number?

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Yep. Great question, senator. You know, Vermont is about a four to one four to one, five to one situation of of growth to to harvest. So you're growing four to five times more wood than you're harvesting at this point. Just to kinda give you an idea, Maine is is 2.5% to 3%, or three to 1%, I should say. So Vermont is at the point where it's growing too much wood and it's having an impact upon management, it's having an impact upon long term deterioration of forests because you're not able to reduce the low grade, you're not able to reduce the amount of wood that's on the land that effectively is going to get taken over, whether it's by blight or that's by invasive species. So you're kind of at a nexus point right now where, yes, Vermont is 80% forested, but the forests are gonna deteriorate at a much faster rate if they're not managed.

[Unidentified Senator (member, Senate Agriculture Committee)]: Thank you, Mr. Chair. Dana, great to see you again. I didn't know about Sam Lincoln, I'm a little disappointed. I thought he was one of the best deputy commissioners we ever had

[Unidentified Senator (continuation of Speaker 4 due to diarization error)]: at Forest Park's Recreation. The, Schneider really did a heck of a job when they were there.

[Unidentified Senator (member, Senate Agriculture Committee)]: And the hole that we are potentially creating and anytime there's a hole created, you gotta find something else to fill that hole. If it's a $100,000, which is what you seem to be indicating, do you have any sense of where senate finance or in the house side ways and means might feel about allowing this sales tax exemption to happen and how they would fill it with something else, or maybe you haven't gotten to that point. Don't know.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Yeah. It's a valid question. Obviously, the Lord giveth, the Lord taketh away. We have not gotten to that point. Last year, as I mentioned, S46 wound its way through just dealing with the purchase and use tax, which had an impact upon the highway fund. Senate Finance was supportive of that and was supportive of it at a much higher rate. JFO came through last year on just the purchase and use tax, which we're not advocating for today. We understand the the impact, but they came forth with a a financial impact on purchase and use tax alone of a $1,000,000 if the full exemption was provided. We challenged that because we frankly couldn't figure out where they were coming up with that information. They settled on a 50% exemption of the per purchase and use tax, but it went through, you know, from senate transportation to senate finance to senate appropes, and and they passed it. And then it got over to the house and it sat there. We're not looking for the purchase and use. I think because of the highway fund challenges, that's the issue. I will say that, you know, we're we're trying to save jobs at this point. And, you know, Vermont is going to lose income taxes if we if we do if, know, if this committee ultimately decides not to do anything, you're gonna lose more income taxes as a result. And I think that that price is much higher than just a $100,000.

[Unidentified Senator (member, Senate Agriculture Committee)]: Yeah. And I'm supportive of this.

[Speaker 0]: I I didn't mean to indicate it was. I just I

[Unidentified Senator (member, Senate Agriculture Committee)]: know how things work.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Yep. Yep. Understood.

[Speaker 0]: We have Jed Lipsky. Go ahead. Just tell us who you are. Jed, come on up.

[Representative Jed Lipsky (House Committee on Agriculture, Food Resilience, and Forestry)]: Yeah. Thank you, chair Ingalls. Thank you, committee members. I for the record, Jed Lipsky, I actually serve on the house ag and forestry committee. Okay. And and I wanna thank Dana Doran for coming in and testifying for his leadership for the working forest community, PLC. And, also, for transparency, I am a member of the PLC. I am a certified master logger, and for sixty years, been taking a living harvesting timber. So and also for full transparency, I sponsored in the house a matching this same bill, and it has been diminished to the point of it's it's not humiliating, Well, we are diving for pennies here. So, senator, your point, I don't wanna be repetitive, but I have been asked to and and follow the best practices to get low ground pressure, track, bulking wheel, cut to length equipment, low ground pressure so we can deal with the, you know, changing climate impacts, protect water quality, protect soil, do all the right things. In Vermont, loggers are held to the highest standard of any anywhere in the country. And like my, you know, fellow patriot, Sam Lincoln, he's over twenty years younger than me. He has made a strategic decision for his family to be able to continue and possibly be profitable. What when Dana Doran was talking about price takers, not setters, that's an understatement. I've worked with a $250,000 scares for as low as $15 an hour when there are people with a $200 weed whacker getting $45 an hour. So every Sam Lincoln does this with a heavy heart. He's been a leader in this state for both setting a standard of quality and environmental responsibility in the harvesting. So when we're asking for something that and nobody's buying new equipment. All of this advanced, low ground pressure, mostly Scandinavian source. No one can afford to buy it. Most of us ours is old. We can't sell it. I, like Sam, have I've raised sons. One of them is in the business, wants to stay at but he is diversified also. The fiscal note could be a fraction of that 100,000. It's no it doesn't affect your Sam brought that in in, I think, 2016 where it exempted forestry equipment, but not from stump to mill. So I support this bill. Any consideration you give the hole that how we're gonna fill that, it it could be I'll give you an example. I have a computer in my log forwarders. 2012. It's painted green. It says John Deere, but all the technology and the most of parts are manufactured out of Finland's wing, It comes here. I can't call Williston and ask anyone to fix it when the cab won't rotate and the screen's black. There's one mechanic in Bangor, Maine. His name is Justin Harmon. He'll come down. But he'll come down, plug in a laptop, make some adjustments, and I'll get a bill for, oh, $7,800. Bringing a service truck, his computers himself. It's a five and three quarter hour drive as the traffic isn't bad, coming across Route 2. And then he suggested there's a part to sensor. It's about the size of a large grape, and that's $1,200. So you're talking about saving a sales tax on $1,200, not the $7,800 repair pill. But it's like you say, it's almost humiliating, but we want a a level field and a chair, Ingalls. There's another mill which Dane and others keep forgetting, and it's called PS on the Coventry Road. I've been bringing them pine logs for decades. They they shuttered a year and a half ago. They're down to maybe 4% of what they normally produce. So the working lands from an ecological and environmental point of view have a critical role. If you're only focused on migratory songbirds, varying structure and early succession that only lagers create is what and that's a a bellwether of our greenhouse gases. So we we as lagers are proud, and we do not we're not asked for handouts. This is trying to create parity between New York, Maine, and the other state. So I'll leave it at that unless you have other questions.

[Speaker 0]: Representative, we're gonna put you to work. You've got a bill that you have championed in the house. And as you know, because you're in this building, we don't have any stats. If you and Dawn or Dana can get the language to us as far as in bill form or what have you, maybe your language if you have, if you can get that to us. I know I've asked Dana over and over again for stuff. I do apologize, Dana. We've been repetitive, but it's in front of us now. So I think that the committee just kind of looking around, we haven't done a straw poll vote, I think that we have that language that we could look at and that's probably we might be inclined to maybe move some of this forward. We're gonna still have some more discussion about it. But if you could get that to us, we'll see where we can go with it.

[Representative Jed Lipsky (House Committee on Agriculture, Food Resilience, and Forestry)]: Sure. We can do that. Clearly, I can speak and think and work, but Dana can think and write at a much higher level.

[Speaker 0]: Dan, anything else you'd like to add before we, call it?

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: I have the language, senators. Literally, as soon as we get off, I will send it to both you and to Linda so that you have the latest version of the sales tax exemption. That's about it. I really appreciate this committee. I know that forestry is not in your realm. I have talked to senator Watson and asked if this committee could take it up, and she did grant that permission a while back. So we appreciate, Senate Natural Resources deferring to the Senate Ag Committee to take up this opportunity. And I'll just say I appreciate your flexibility and willingness to work with us.

[Speaker 0]: Thank you. As easy as you can make it. We can just get it in on miscellaneous bill. That'd be very helpful.

[Dana Doran, Executive Director, Professional Logging Contractors of the Northeast]: Sounds good. On the way.

[Speaker 0]: Thank you very much.

[Unidentified Senator (excavation business background)]: Appreciate you

[Speaker 0]: coming in the other day and jumping on, doing more this today. Thank you very much. Thank you. You're welcome. Committee, we'll take a break until quarter up or two minutes before quarter up.